ERC cuts FiT rates for hydro and biomass projects

The Energy Regulatory Commission (ERC) has lowered the Feed-in-Tariff (FiT) rates for hydro and biomass power projects that are scheduled for commercial operations this year.

In a two-page resolution signed by the ERC commissioners on January 24, but was made public only on Tuesday, the degressed FiT rates for January to December 2017 hydro and biomass plants with commercial operations within the year are P5.8705 per kilowatt-hour (kWh) and P6.5969 per kWh, respectively.

The approved rates are lower compared to the July 2012 FiT rates of P5.90 per kWh for hydro and P6.63 per kWh for biomass.

“FiT rates for run-of-river hydro and biomass shall be degressed at a rate of 0.05 percent for the period January to December 2017, which is two years from the January 2015 FiT effectivity,” the ERC resolution read.

When sought to comment further as to why the FiT rates for the said renewable-energy (RE) technologies were lowered, ERC Spokesman lawyer Floresinda Digal said, “They should be referred to as degressed FiT, more of adjusted than new.”

Under the FiT rules, the eligible RE plants shall be entitled to such degressed FiT rate corresponding to the year when they started commercial operation. The ERC may approve a different degression rate for different technologies. This rule, the ERC said, is meant to encourage the RE producers to invest at the initial stage and hasten deployment of RE.

The FiT is basically an incentive in the form of guaranteed power rate given to RE producers for 20 years. However, consumers are the ones who shoulder the FiT-All, a separate line component in the power bills.

The said FiT rates were based on installation ceilings set by the Department of Energy. The ERC is the agency that sets the FiT rates.

As of December 31, 2016, the ERC issued certificates of compliance for FiT Eligibility for a total capacity of 28.6976 megawatts (MW) and 144.804 MW for run-of-river hydro and biomass, respectively.